Folau linked to Waratahs

Super Rugby's NSW Waratahs have emerged as a shock home possibility for code-hopper Israel Folau.

The former Australian rugby league international quit AFL's Greater Western Sydney Giants last month claiming he wanted to return to the NRL with Parramatta.

But after stunning Eels management on Friday with the announcement he would not join them for the 2013 season or beyond - despite the club and the NRL agreeing on a deal that would fit within Parramatta's salary cap - Super Rugby are believed to have emerged as the frontrunners for his services.

The Eels are furious, believing Folau used them as a stepping stone to rugby union where the Waratahs have firmed as favourites to win his signature.

Folau has always maintained he wanted to continue to live and play in Sydney where he is close to his church and his mates, giving Super Rugby battlers NSW - who ended the 2012 season on an eight-game losing streak - the inside running.

His acquisition would give the ailing Waratahs, who have struggled for crowds and media space in an increasingly crowded market, a real boost.

"Are the Waratahs on the cards? Definitely ...", a source close to Folau's camp told AAP.

After struggling to adapt to life in the AFL, Folau's undoubted talents would seemingly translate easily to the 15-a-side game.

New NSW coach Michael Cheika has signalled his intention to return the side to a running brand of rugby and Folau's speed and agility would be a huge asset there.

It is understood Folau could make significantly more in Super Rugby than he would have with the Eels.

But the deal is far from signed and sealed with the Queensland Reds and European rugby also possible landing places for Folau.

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